why do some unqualified opinions have explanatory paragraphs? course hero

Why do some unqualified opinions have explanatory paragraphs?

The unqualified opinions have explanatory paragraphs as: 1) It highlights the points that are important and needs to be brought to attention.

What is unqualified with explanatory paragraph or modified wording?

3-9 An unqualified report with an explanatory paragraph or modified wording is the same as a standard unqualified report except that the auditor believes it is necessary to provide additional information about the audit or the financial statements.

What are some of the reasons for an explanatory paragraph within the audit report?

The explanatory paragraph should include (1) a statement that the previously issued financial statements have been restated for the correction of a misstatement in the respective period and (2) a reference to the company's disclosure of the correction of the misstatement.

How many paragraphs is an unqualified opinion?

According to the US auditing standard, the title should include “independent” in order to convey the user that the report was fully unbiased in all respects. Three main paragraphs constitute the main body of the unqualified report with each of the paragraphs having a standard wording and individual purpose.

What is an unqualified opinion?

What Is an Unqualified Opinion? An unqualified opinion is an independent auditor's judgment that a company's financial statements are fairly and appropriately presented, without any identified exceptions, and in compliance with generally accepted accounting principles (GAAP).

What is the difference between qualified and unqualified opinion?

A qualified opinion is a reflection of the auditor's inability to give an unqualified, or clean, audit opinion. An unqualified opinion is issued if the financial statements are presumed to be free from material misstatements. It is the most common type of auditor's opinion.

What does it mean if an audit is unqualified?

What Is an Unqualified Audit? An unqualified audit reflects business financial statements that are transparent and compliant with generally accepted accounting principles (GAAP). An unqualified opinion is given after thorough research considering all accompanying financial documents.

What are the components of an unqualified audit opinion?

An unqualified report for a private company follows a standard format with three paragraphs: introduction, scope, and opinion. Introduction: This paragraph indicates what financial statements you audited and includes a statement that the financial statements are the responsibility of management.

What are the purposes of the scope paragraph in the auditor's report identify the most important information included in the scope paragraph?

The purpose of the scope paragraph under the auditor's responsibility is to inform the financial statement users of the nature of the audit procedures performed. The information in the scope paragraph includes: 1. Procedures used to obtain audit evidence about the amounts and disclosures in the financial statements.

What is the difference between an unqualified opinion and an unmodified opinion?

Simply, unmodified opinion is a clean opinion where as unqualified opinion is a “modified” clean opinion with emphasis of matter paragraph.

Is it appropriate for the auditor to include an emphasis paragraph in an unqualified audit report?

04 of AS 2710, Other Information in Documents Containing Audited Financial Statements. Emphasis paragraphs are never required and are not a substitute for required critical audit matters described in paragraphs .

Why is an unqualified audit opinion desirable?

At the conclusion of a financial statement audit, the company's audit firm provides an opinion on the company's financial statements. An unqualified opinion communicates to financial statement users that they may have reasonable assurance that the financial statements are free of any material misstatement.